When it comes to creating an emergency fund, saving for retirement, or paying down debt the standard solution seems to be “I’ll get to it when I get to it”. So when is the right time to deal with your finances? The best time is always!
Saving a small percentage of your current income to ensure a comfortable retirement is always a good idea. Having an emergency fund for the unfairness life throws our way is always a safe plan. And is paying down debt always your ultimate goal – seriously is that even a valid question?
Best Time to Start Saving?
For too many of us there always seems to be some future moment when all the planets will align and then you’ll get your finances in order. If this is starting to sound like a failed New Year’s Resolution perhaps you’re starting to see my point.
In reality, the best time to deal with any financial issue is always. When you get that first job and now have income it’s time to create saving habits that will last a lifetime. As soon as your credit card has a balance it’s time to pay it off. When an unexpected cost hits you it’s critical to have that emergency fund to get you through.
Employer Pension Plans
For those who have an employer that offers a pension plan it’s always advisable to check out the details. Does the plan offer employee matched contributions? Never miss out on this opportunity for free money.
Best Investment Vehicles
When you save for retirement the strategy is to aim for the best return on your money. How do you do that? You must take on some risk which means being invested in the stock market. To invest safely you must have a long time horizon, be diversified, and reduce fees to a bare minimum (for details on investing safely for the long term please refer to my post “Easy as One Two Three”). So, when is the best time to be invested in the stock market?
In the long term the market will go through cycles of dramatic rises, drastic nerve wracking drops, and mediocre performance. So how can you possibly know when is the best time to be invested? You guessed it; always. Over the course of twenty or more years history has shown the market will go up and it will outperform safe investments like bonds and outpace inflation. The best time to be invested in the stock market is – Always.
RRSP and TFSA
Sadly many people have no idea how to use a Registered Retirement Savings Plan (RRSP). Even fewer could explain the difference between an RRSP and Tax Free Savings Account (TFSA). Most don’t know how easy it is open an investment account and purchase shares in a low fee, well diversified index fund and begin their journey to financial independence. When is the best time to learn about these financial concepts; by now you can probably guess my response – Always.
I make no excuses here as it took me forty five years to figure this out. It will never be too late to improve your financial knowledge and it will always put you on the path to a better future.
In my E-books (“Water Barrel” and “The Balance”) I discuss simple methods to live sensibly for today, take charge of your financial affairs, and invest safely for the long term. For more information please visit David Penna Amazon.